Are they burning Kaguya?

That's only delaying the inevitable.

I think Hieda no Akyuu died/reincarnated again...

it sure looks like her indeed

A flower hair ornament or clothes design print would help identify, but I would agree with Akyuu, since the body is small enough.

Oh, took me serveral minutes to realize the figure in the smoke, lol.

The pixiv-tags say nothing about Kaguya or Akyuu. She kinda reminds me of Mokou before she drank the elixir...

I see a burning spirit rising from the flame and it looks like Mystia.